SUV sales help BMW’s profits to go up 15% in the first quarter of 2015

BMW’s profit for the first quarter of 2015 grew by 21% -- the result of higher demand in Europe and the U.S. for models like the X5 SUV. In a statement, BMW revealed that EBIT (earnings before interest and taxes) climbed from 2.09 billion euros the previous year to 2.52 billion euros ($2.83 billion). Its revenue also increased by 15% to 20.9 billion euros.

In the first quarter, BMW had an automotive EBIT margin of 9.5%, staying at a level comparable to the first quarter of 2014 and at the upper end of its 8-10% target range. This is attributed to record-breaking sales of high-margin SUVs in the period. Meanwhile, Daimler’s Mercedes-Benz brand reported a 9.2% return on sales for the first quarter from 7% the previous year.

On the other hand, Audi’s operating margin decreased from 10.1% to 9.7%. According to Juergen Pieper, an analyst at Bankhaus Metzler, currency tailwinds caused some of the profit increase. Having unchanged profitability means that BMW is “growing slowly.” However, Pieper pointed out the growth has not been as fast as at Daimler.

Nevertheless, BMW is expecting to break sales and profit records (before taxes) this year as it launches 15 new or upgraded Rolls-Royce, Mini and BMW models, which include the BMW 2-series Gran Tourer seven-seat compact minivan as well as a revamped variant of the range-topping 7-series sedan.

BMW said that the anticipated sales volume increase and the exchange rates have led to a forecast that automotive segment revenues will “significantly” grow. BMW’s previous forecast had been for a “solid” revenue growth. However, BMW warned that there will be difficult regions.

It cited the Russian market as well as China’s market, which will have a “less dynamic growth” due to the normalization process. For the first quarter, a 5.4% increase to 451,576 cars was recorded for BMW brand sales – helped by the growth in China, Europe, and North America, as well as 30% more deliveries of the X5.

Mini brand sales increased by 29% to set a record of 74,312 units sold, aided by a new-gen 3-door hatchback and the first five-door car for the brand. Meanwhile, Rolls-Royce reported a 13% increase in volume with 781 units sold, helped by Ghost sedan sales.

As a result, Rolls-Royce had its second-best sales ever for the first quarter. Earnings of BMW, Volkswagen, and Daimler all grew in the first quarter as the automobile market in Europe recovers and as more people purchase up-market models.

BMW has been forced to cut production and prices as it feels the impact of a slowing Chinese economy. However, industry officials are hopeful that this factor will be offset by the growth in Germany and the U.S., where sales have climbing for 60 consecutive months.